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Financial Services Republicans: AIG bailout still the wrong call

Republican members of the Financial Services Committee on Tuesday maintained that the U.S. government’s decision to bail out insurance giant American International Group in 2009 was the wrong move, as Treasury announced its final selloff of AIG shares this week.

Rep. Shelley Moore Capito (R-W.Va.), chairman of the Financial Services Financial Institutions Subcommittee, congratulated Treasury at the POLITICO Pro’s P2012 Policy and Politics Financial Services Luncheon. “Congratulations to the Treasury Department for their selling off and making a profit. … That is good news for taxpayers,” she said.

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But Capito said that the support AIG received from the government simply begs the question: “Is there really such a thing as ‘too big to fail?’”

“It’s now baked into the law of Dodd-Frank law,” the West Virginia lawmaker said. “I think it gives certain competitive advantages to certain institutions.”

The Treasury announced that its last 234.2 million shares of the company would be sold at $32.50 per share. The move effectively ends taxpayer ownership of the company.

Capito’s colleague on the Financial Services panel, Rep. Scott Garrett (R-NJ), billed the bailout a “terrible decision,” and said the decision placed a “moral hazard” into the marketplace.

“New York was no longer considered the financial capital of the world. Washington, D.C. continues to be,” said Garrett, the chairman of the Financial Services Capital Markets Subcommittee.

“The institutions that failed by and large were some of the most heavily regulated ones in the country,” he added. “The aspect of the economy that was most regulated was heavily regulated at the time. Yet they failed.”

“I’m happy, by the way, that AIG bailed itself out, but I’m also happy that Dodd-Frank has a too-big-to-fail provision,” said Frank Keating, president of the American Bankers Association.

This article first appeared on POLITICO Pro at 12:47 p.m. on December 11, 2012.

Yes, It would have been so much better to just let the economy plunge into a depression in order to march in lock step with Republican ideology. As it turns out, the tax payer made a hefty profit. Gosh, what a bad idea!!??!! The only "moral hazard" built into the marketplace is the lack of common sense regulation. If only the Republican congressmen would put country before campaign contributions we could all get on with our lives. Shameful.